Working Paper: NBER ID: w26197
Authors: Daniel W. Elfenbein; Raymond Fisman; Brian McManus
Abstract: We use U.S. eBay data to investigate how trade is influenced by differences in socioeconomic characteristics, tastes, and trust. States’ similarity in cultural characteristics (ethnicity, religious affiliations, and political behavior) is predictive of online trade; cultural similarity similarly predicts trade between finer (three-digit zip code) geographies. The culture-trade relationship is mediated in part by consumers’ tastes, and is stronger for transactions with sellers who lack extensive reputations or certification, suggesting that consumers infer seller trustworthiness from cultural similarity. There is no correlation between cultural similarity and buyer satisfaction, consistent with perceived differences in trustworthiness not being validated by actual transactions.
Keywords: online trade; socioeconomic differences; cultural differences; trust; ebay
JEL Codes: D12; D91; F14; L15; R12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Greater cultural distance (Z19) | Lower trade between state pairs (F10) |
| One standard deviation increase in ethnic similarity (J15) | Trade (F19) |
| Narrowing the home value gap between states (H73) | Trade (F19) |
| Cultural similarity (Z13) | Greater trust for transactions with sellers lacking extensive reputations (L14) |
| Cultural similarity (Z13) | Higher trust (Z13) |
| Cultural distance (Z10) | Trade (F19) |
| Cultural and socioeconomic differences (Z13) | Trade flows (F10) |
| Cultural similarity (Z13) | Trade (F19) |